We Do Not Want to Withhold Your Money!
California Tax Withholding Requirements for Rental Property Owners
If you earn rental income from California property, the Franchise Tax Board (FTB) may require withholding
Your requirements depend on whether you’re a California resident (or have a CA-registered entity) or a nonresident.
Use the guide below to stay compliant and avoid unnecessary withholding.
At-a-Glance
Withholding rate (nonresidents)
7% of California-sourced rental income
(over $1,500/year).
Residents
Generally exempt from withholding, but must certify residency with Form 590.
Nonresidents
Can request a waiver to prevent withholding using Form 588.
Choose Your Scenario:
Scenario A — You’re a California resident or have a CA-registered entity
What you must do: Submit Form 590 – Withholding Exemption Certificate to certify your exemption.
Why this matters
California law requires property managers to withhold 7% from payments to nonresidents. As a resident (or CA entity), you’re exempt—but only if you certify your status with Form 590. If we don’t have a completed Form 590 on file, we are legally required to withhold.
How to complete Form 590 (quick steps)
Check your inbox
We’ll send an email titled “Action required – complete and return Form 590 (Withholding Exemption Certificate)” with the form attached.
Fill in “Payee Information"
Select your exemption
Check “Individuals — Certification of Residency” (or the applicable option).
Sign (e-signature or handwritten) and return to your Property Manager
Note: We store the completed form securely. We do not send it to the FTB unless they request it. Your certificate remains valid until your residency status changes. If you later become a nonresident, please notify us immediately.
Scenario B — You do not reside in California and have no CA-registered entity
What’s happening: The FTB requires us to withhold 7% of rental income from nonresidents receiving more than $1,500/year in California-sourced income.
Good news
You can request a waiver so we don’t have to withhold. Submit Form 588 – Withholding Waiver Request directly to the state.
How to request the waiver (Form 588)
Check your inbox
Look for “Action Needed: Prevent State Withholding on Your Rental Income.” We’ll email you Form 588 pre-filled with Palm Tree Properties’ information.
Complete your details
Fill Part II and Part IV as the Payee.
In Part IV, select your waiver reason (use the legend at the bottom of the form).
In Part III, choose “Rents.”
Sign and date at the bottom.
Submit to FTB using one of these options
Online (MyFTB): ftb.ca.gov/myftb
Mail:
Franchise Tax Board
Withholding Services and Compliance MS F182
PO Box 942867
Sacramento, CA 94267-0651Fax: 916-855-5742
After approval
Email us your Waiver Determination Notice so we can update your file and stop withholding
Tip box: Submitting online via MyFTB is typically the fastest way to receive a determination.
Need help?
Questions about which form applies to you or how to complete it?
Email: pm@palmtreeproperties.com
Frequently Asked Questions
Do I need to send Form 590 to the FTB?
No. Send it to Palm Tree Properties. We store it securely and provide it only if the FTB requests it.
How long is Form 590 valid?
Until your residency status changes. If you become a nonresident, tell us right away.
I’m a nonresident. How do I avoid withholding?
Submit Form 588 to the FTB and send us your Waiver Determination Notice once approved.
What happens if I don’t complete the required form?
By law, we must withhold 7% from your rental distributions (for nonresidents or residents without Form 590 on file).
Compliance Notice
This page provides general information and is not tax or legal advice. Requirements can change. Consult your tax advisor for guidance specific to your situation.